Chinese policymakers need caution to counter financial crisis

Special Report:Global Financial Crisis

BEIJING, Feb.6 -- With early signs that the

national economy may be bottoming out, Chinese policymakers can surely be more

confident about the stimulus plan they adopted to counter the global financial

crisis and recession.

However, high hopes that China can be the first to

recover from the current crisis do not mean that caution is not needed.

Emerging uncertainties like climbing unemployment

across the country are a cause for concern. And the fight against the economic

downturn is clearly far from over.

A drastic slowdown of the Chinese economy in the

fourth quarter last year bears full testimony to the toll the global crisis has

taken on China. The 6.8-percent quarterly GDP growth has dragged China's

full-year growth to 9.0 percent, snapping a five-year streak of double-digit

gains.

Yet, amid gloomy forecasts about the global outlook

as well as China's growth prospects, the better-than-expected monthly data for

December has already given Chinese policymakers confidence to claim that the

country's counter-crisis measures are taking effect.

Latest economic indicators depict an even rosy

January. For instance, the official purchasing managers' index for January rose

to 45.3, up from 41.2 in December and a record low of 38.8 in November.

Although the sub-50 reading indicated manufacturing

was still contracting, it offered evidence that the economy was gradually

bottoming out.

Besides, the government's recent decision to increase

the tax rebate rate for textile and garment exports and enhance support for the

machinery manufacturing industry also gives a timely shot in the arm for

domestic enterprises.

It is safe to predict that as the government quickly

comes up with supportive measures for a number of key industrial sectors, the

stimulus package underpinned by proactive fiscal and moderately loose monetary

policies will substantially speed up the economy's recovery.

The effectiveness of the country's responses to the

global crisis will enable enterprises and individuals to overcome hardships

ahead with greater determination. But it provides no ground for complacency

among policymakers.

Internationally, the global recession can still

become more severe than expected.

Domestically, the estimation that about 20 million of

China's migrant workers had returned home jobless before the Chinese New Year

augurs unprecedented unemployment pressure for cities to which they will return

soon.

Policymakers should race against time to address

these problems.

(Source: China Daily)